TIDM88E
RNS Number : 5272H
88 Energy Limited
04 August 2021
This announcement contains inside information
88 Energy Limited
Umiat Oil Field - Update
Highlights
-- Further studies conducted in conjunction with the Merlin-1
post well testing and analysis have identified additional upside at
the Umiat oil field.
-- Approval from BLM to defer Umiat Year 2 Unit well commitment by 24 months to 31 August 2023.
-- Deferral allows for optimisation of full field development
plan, including evaluation of potential synergies with Project
Peregrine plans.
-- Studies underway to review historical Umiat oil field
development plans have identified potential cost savings on planned
development CAPEX.
88 Energy Limited ("88 Energy" or the "Company", ASX:88E,
AIM:88E, OTC:EEENF) is pleased to provide the following update
related to the Umiat oil field, located on the North Slope of
Alaska.
Umiat Oil Field - Upside Potential
As part of the acquisition of the Umiat Unit Leases, Emerald
House, wholly-owned subsidiary of 88 Energy, received the Umiat
data pack which includes the Umiat 3D seismic data. The Umiat 3D
survey abuts the southern edge of the Project Peregrine lease
blocks. Previously, only 2 seismic lines-controlled interpretation
across the Umiat structure.
Integrating the Linc/Malamute interpretation has provided a
better understanding of the Peregrine reservoir geometries to the
north as well as enriching our petrophysical database with
additional well control (Umiat-8 and Umiat-23H).
Merlin-1 penetrated a thick section of Grandstand sands (Umiat
reservoir unit). Wireline data collected over this interval is
being analysed and integrated with the Umiat dataset. Preliminary
pressure analysis suggests there is potential for bypassed pay in
the footwall of the Umiat structure. The Umiat footwall has only
been penetrated by one well (Umiat-11), which was drilled in 1952
with a crude logging and testing program. Seismic attribute
analysis suggests there is potential for additional reservoir sands
in the footwall of the Umiat structure.
Deferral of Well Commitment by 24 Months
On 4 August 2021, 88 Energy, via its wholly owned subsidiary
Emerald House LLC ("Emerald House"), owner of 100% of Umiat oil
field leases AA-084141 and AA-081726 ("Umiat Unit Leases"),
received notification from the Bureau of Land Management ("BLM") of
approval of its request for a 24-month extension to the Year 2 Unit
Obligations, and corresponding extensions for the Unit obligations
in Years 3, 4 and 5.
Emerald House requested an extension of 24 months to enable the
Company to analyse the extensive amount of historical data acquired
from the sellers of the Umiat oil field. The 24-month extension to
the Year 2 Unit Obligations allows the Company to optimise a full
field development plan, which will include evaluating potential
synergies with plans associated with the Project Peregrine acreage.
It will also enable 88 Energy to use the knowledge gained from
drilling the Merlin-1 well to plan an efficient operational program
to maximise the chance of success at Umiat.
88 Energy plans to utilise the additional 24 months to:
-- Investigate previous scoping studies and explore possible
alternative development scenarios to improve the economics of the
Umiat oil field, including synergies with 88 Energy's existing
acreage (Project Peregrine and Project Icewine) as well as possible
synergies with nearby leaseholders (such as the Willow oil field,
noting that the Biden administration has provided support to
develop this field);
-- Update and perform revised sensitivity analysis around
project development scenarios, incorporating knowledge gained from
the drilling of Merlin-1, and consider the potential for a tie-in
to the nearby Willow oil field development;
-- Develop a detailed understanding of the potential
environmental impacts of further exploration and development in the
region;
-- Identify and map potential future drilling locations;
-- Engage with local communities, subsistence groups and the
North Slope Borough (NSB) to inform them of anticipated plans for
the Umiat (and Peregrine) area; and
-- Incorporate the Merlin-1 drilling results and ascertain (via
biostratigraphy and/or new seismic acquisition) whether Umiat and
Project Peregrine targets share the same reservoir interval.
The revised Unit Obligations in Years 2 to 5 are as follows:
Year 2 Unit Obligation: Current: September 1, 2020 to August 31,
2021
Amended: September 1, 2020 to August 31, 2023
Year 3 Unit Obligation: Current: September 1, 2021 to August 31,
2022
Amended: September 1, 2023 to August 31, 2024
Year 4 Unit Obligation: Current: September 1, 2022 to August 31,
2023
Amended: September 1, 2024 to August 31, 2025
Year 5 Unit Obligation: Current: September 1, 2023 to August 31,
2024
Amended: September 1, 2025 to August 31, 2026
Umiat Oil Field - Review of Historical Development Plans
Commenced
88 Energy has commenced studies to review the historical Umiat
oil field development plans prepared by Linc Energy, which formed
the basis of the Ryder Scott 2015 reserves report. Initial results
of the internal review and studies have identified potential cost
savings on planned development CAPEX, as well as alternative
potential routes to market for the crude which could include a
potential tie-in to the Willow oil field development to the north
of the acreage.
Over the second half of 2021, the Company will continue to study
the historical development plans proposed, as well as consider
alternative development options which may also include development
in conjunction with the nearby Project Peregrine.
About the Umiat Oil Field
On 8 January 2021, 88 Energy, via its wholly owned subsidiary
Emerald House, entered into a Sale and Purchase Agreement with
Malamute Energy, Inc and Renaissance Umiat LLC to acquire the Umiat
oil field. The consideration for the purchase was a 4% ORRI and
assumption of the liability for the abandonment of the Umiat-18 and
Umiat-23H wells, drilled by Linc Energy in 2013/2014. The cost to
abandon the two wells in April 2021 was approximately US$1m, which
will be partially offset by the release and return of US$0.4m in
bonds.
Umiat is a known oil field of high quality (38-degree API) crude
at shallow depth. It is covered by two leases comprising 17,633
acres, which are in a unit that was formed in September 2019 with
an initial 10-year term.
Umiat was discovered in the mid-1940s with 11 appraisal wells
drilled by 1953, several of which were tested. Umiat-5 flowed 268
barrels per day on a 3-month test and Umiat-8 had a peak flow rate
of 5.9mmcf/d of natural gas during a 4-day test. Minimal
operational activity was carried out until 2013/2014 when Linc
Energy drilled two wells, Umiat-18 and Umiat-23H. Umiat-23H was
tested with a maximum flow rate of 800 barrels per day and a
sustained rate of 200 barrels per day.
Substantial engineering and environmental work was subsequently
carried out by Linc Energy in support of a potential future
development. One of the routes for access to infrastructure runs
directly through 88 Energy's Project Icewine leasehold where there
are significant independently estimated resources of oil and gas.
88 Energy is undertaking a full field review of the Umiat oil field
to determine commercialisation options as a stand-alone development
and whether optimisation of the previous development plan is
possible. A discovery at Project Peregrine, where future appraisal
drilling is planned, would contribute significant value to any
development at the Umiat oil field.
Umiat Reserves Table (barrels of oil; '000)
Gross Reserves Net Reserves to 88E Revenue Entitlement
1P 2P 3P 1P 2P 3P
-------- ------- -------- ---------------- ----------------
- 123,693 57,156 - 94,007 43,439
-------- ------- -------- ---------------- ----------------
Refer to ASX Announcement on 11 January 2021 for further detail
in relation to pricing assumptions and ASX Reserves & Resources
Reporting Notes
Reserves Cautionary Statement
Oil and gas reserves and resource estimates are expressions of
judgment based on knowledge, experience and industry practice.
Estimates that were valid when originally calculated may alter
significantly when new information or techniques become available.
Additionally, by their very nature, reserve and resource estimates
are imprecise and depend to some extent on interpretations, which
may prove to be inaccurate. As further information becomes
available through additional drilling and analysis, the estimates
are likely to change. This may result in alterations to development
and production plans which may, in turn, adversely impact the
Company's operations. Reserves estimates and estimates of future
net revenues are, by nature, forward looking statements and subject
to the same risks as other forward-looking statements.
88E confirms that it is not aware of any new information or data
that materially affects the information included in the previous
market announcement and, in the case of estimates of
prospective resources or reserves, that all material assumptions
and technical parameters underpinning the estimates in the previous
market announcement continue to apply and have
not materially changed.
This announcement has been authorised by the Board.
The below graphics can be viewed in the pdf version of this
announcement, which is available on the Company's website
www.88energy.com ;
- Fig. 1: Grandstand depth surfaces showing potential for
bypassed pay in Umiat foot-wall
- Fig. 2: Umiat Oil Field Location
Media and Investor Relations:
88 Energy Ltd
Ashley Gilbert, Managing Director
Tel: +61 8 9485 0990
Email:investor-relations@88energy.com
Finlay Thomson , Investor Relations Tel: +44 7976 248471
Fivemark Partners , Investor and Media Relations Tel: +61 410 276 744
Andrew Edge / Michael Vaughan Tel: +61 422 602 720
EurozHartleys Ltd
Dale Bryan Tel: + 61 8 9268 2829
Cenkos Securities Tel: + 44 131 220 6939
Neil McDonald / Derrick Lee
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